Sen. Warren asks FTC to review CVS Health’s $10.6B acquisition of Oak Street Health
Senator Elizabeth Warren (D-MA) has penned a letter urging leaders at the Federal Trade Commission (FTC) to take a hard look at CVS Health’s planned acquisition of Oak Street Health. The deal is valued at $10.6 billion.
Warren wrote to FTC Chair Lina Khan and Commissioners Alvaro Bedoya and Kelly Slaughter asking them to scrutinize the deal, which is an all-cash transaction announced back in February. Oak Street Health is a primary care provider focused on the Medicare population. CVS Health, the nation’s largest pharmacy chain with more than 10,000 locations, has continually added healthcare services over the last several years and increased its presence as a provider.
According to Warren, the FTC should scrutinize any healthcare deal that threatens competition, increases prices and reduces the quality of care. In addition, she urged the agency, which is charged with enforcing federal consumer protection laws that prevent fraud, deception and unfair business practices, to retrospectively review similar deals and challenge in court any mergers that have violated antitrust laws by reducing competition. She specifically named deals by United, Humana, WBA, Walmart and Amazon for the FTC to review.
“(T)he acquisition of thousands of independent providers by a few massive health care megaconglomerates could reduce competition on a local or national basis, hurting patients and increasing healthcare costs,” Warren wrote in her letter. “I have fresh concerns in light of CVS Health Corp.’s (CVS) pending acquisition of Oak Street Health, Inc. (Oak Street), the latest example of a major healthcare company expanding its reach into the primary care industry.”
The letter comes as rumors have swirled that the FTC may soon take action against Amazon for some of its acquisitions and business practices. Amazon has also stepped up its healthcare activities through major acquisitions worth billions, including an online pharmacy and clinical care services. The move could signal that other mega-mergers could come under more scrutiny.
Previous studies have also found that healthcare consolidation can lead to higher prices and less competition in certain markets, while some healthcare companies claim mergers actually lead to lower prices and higher quality of care. Warren cited one study that found the price of an MRI scan is 36.5% higher when a patient is referred by a vertically integrated referring physician. They also pay 31.9% higher out-of-pocket costs.
CVS Health already offers many in-person healthcare services through its own MinuteClinic and HealthHUB brands.
“This recent spate of acquisitions constitutes a major push by health care companies towards vertical integration, creating a few large healthcare conglomerates that control all aspects of patients’ health care journeys,” Warren wrote. “Healthcare companies, especially those with health-insurance units like CVS, are betting that controlling providers directly will allow them to cut costs by managing patient care more closely.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."